A year before BoE base rate fell to 0.5% the average fee was just £889. Four years later, the average fee has risen by 70.30% to its current level of £1,514.
The average two-year fixed fee is £1,565 and a 75% LTV offers an average rate of 4.31% while the five-year fixed is slightly less at £1,014 and the average 75% LTV will cost 4.19%.
The highest fee, Accord at £3,990, is for a 75% LTV fixed for five years at 3.79% so clearly in this case, the higher fee earns you a lower overall rate. But this doesn’t follow across the board. The Post Office offers a two-year fixed 75% LTV at 3.65% with absolutely no fee.
Sylvia Waycot, finance expert at Moneyfacts.co.uk, said: “There is no logical reason why fees should have increased so much. In the space of just August and September alone, they have increased by an average of £42.
“Mortgage administration costs can’t have jumped 70%. Credit searches are no more complex than in previous years, so why are fees so high?
“It could be that lenders are keen to push fees because they are an upfront cost, which means they get the money at the start regardless of fulfilling the full length of a fixed term.
“And should you not fulfil the full length of the fixed term, well that can open the door to a whole host of other upfront charges.
“Doing your homework before choosing your mortgage is key. Mortgages have always been complicated but these days that complication has sadly been taken to a whole new level.”
Average Mortgage Fees
Mar-08 £899
Sep-08 £1,068
Sep-09 £925
Sep-10 £924
Sep-11 £1,023
Sep-12 £1,514
Source: Moneyfacts.co.uk
